Oil prices rose on Wednesday in a volatile session as investors awaited Washington’s next move in the war with Iran, with Democrats capturing control of US Congress from President Donald Trump’s Republicans in midterm elections.
Brent futures rose 82 cents, or 0.8%, to $104.42 a barrel at 0510 GMT. US West Texas Intermediate crude futures gained 50 cents, or 0.5%, to $96.59, reversing earlier declines.
In the previous session, Brent settled at its lowest level in nearly four weeks as traders weighed talks to end the wars in Ukraine and Iran.
Vote counting was underway in the US midterm elections, with Democrats snaring majorities in both houses of Congress for the rest of Trump’s second term.
“President Trump’s conflicting signals, with military strikes continuing alongside statements downplaying further escalation, have made it difficult for traders to build strong directional conviction,” said Priyanka Sachdeva, head of market insights at Phillip Nova.
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“I believe some profit-taking and reduction in speculative long positions are justified, particularly after the sharp rally in October,” said Sachdeva.
“However, the underlying supply disruption risks around the Strait of Hormuz have not disappeared. An unexpected drawdown in US crude inventories is also offering some fundamental support,” she added.
The US had carried out “defensive” strikes on Iran’s Qeshm island targeting surface-to-air missiles used against US assets, a US official said on Tuesday. Another official said the strikes appeared limited and did not signal a return to major combat operations.
Markets remained on watch for any progress in talks to end the US-Israeli war with Iran, as Qatar stepped up mediation efforts to avert an escalation of attacks after the US elections.
A senior Iranian official told Reuters on Tuesday that Iran and the United States remain far from a deal to end their war.
US President Donald Trump told the Financial Times on Tuesday that the United States had no immediate plans to strike Iran.
Meanwhile, crude stocks fell by 5.27 million barrels in the week ended October 30, market sources said on Wednesday, citing data from the American Petroleum Institute.
Eight analysts polled by Reuters had expected, on average, a rise of about 880,000 barrels in crude inventories.
Gasoline stocks rose by 1.43 million barrels, while distillate inventories fell by 1.19 million barrels from a week earlier, the sources said.
“Diesel inventories remain tight, while gasoline stocks rose more than expected. The data are broadly supportive of oil prices,” Haitong Futures said in a note on Wednesday.
Official data from the US Energy Information Administration is due at 10:30 a.m. EST (1530 GMT) on Wednesday.